Brendan Rodgers has conceded Liverpool's chances of lifting a first league title in 24 years are over after his players indulged in "Roy of the Rovers football" in the hope of bolstering their goal difference and contrived instead to surrender a three-goal lead.

Crystal Palace mounted a breathtaking recovery at the last, as all semblance of Liverpool's defensive discipline evaporated, while Palace, inspired by Yannick Bolasie's sudden burst of energy and a brace from the substitute Dwight Gayle, ran riot with three goals in 10 minutes.

The point secured put Rodgers' team a point clear at the top but Manchester City have a game in hand, against Aston Villa on Wednesday, before their final-day match with West Ham, and all momentum has been drained from Liverpool's pursuit with the manner of this capitulation.

"For me the title has gone, yes," said Rodgers. "We needed to win tonight to keep the pressure on. It was still in the hands of Manchester City, so us winning would have given them a bit of pressure in the Aston Villa game. Villa will make it difficult against them but everyone will look at City's squad and see them as a team who can win two games and win the title. I think they'll go and win their two games now and will be champions, but this game was hugely disappointing.

"For 78 minutes we were outstanding. We'd looked solid defensively and didn't have many scares, had control of the ball and had gone three goals up but we got carried away and lost our defensive structure.

"We thought we could play Roy of the Rovers football and make the goal difference up but tonight was about winning the game. When we had the structure and discipline to our game, we scored goals and created chances. But we didn't manage the game. At 3-0 we gave them a sniff and they have some good players who can punish you. This is something we'll improve on for next season. We've got better this season from last seasonand we need to get better again next year."

Luis Suárez was inconsolable at the final whistle and had to be hauled to his feet by the captain, Steven Gerrard, who had also been in tears. "It was just the circumstances …" said Rodgers. "It would have been [crushing] anyway had we not won the game but to have been 3-0 up, it feels like a loss. It's very quiet in the dressing room. The players are devastated but, in the last 11 minutes, we didn't defend at all with any cohesion.

"Tonight was about dealing with the situation. We needed that calmness and control to see the game out but we didn't manage it. Our decision making in that period of pressure has to be better. That's not just tonight. It's something I've seen at times this season.

"But we can be incredibly proud of this season. We've scored 99 goals – we'd managed 47 the season before I came in and to have kept improving like we have gives me immense pride. We're actually ahead of schedule.

"We've made great strides and, while I'm here, I'm fighting to win titles. I'll be relentless in my quest for that. That's why I came. I've seen a lot this season that has given us great hope going forward. We're building something sustainable. We haven't thrown a bucket-load of money at it. We're trying to build. We'll keep working and we'll try and make more strides forward next season.

"When we reflect on it in the summer, we'll see it as an outstanding season for Liverpool Football Club. But that doesn't take away the pain now because this was a game we should have won. Now we have to learn and get better."

The Palace manager, Tony Pulis, who has steered his team to at least a remarkable 11th-place finish having been bottom with four points after 11 matches upon his appointment, suggested the season could yet have another twist to allow Liverpool a second chance.

"We just don't know," added Rodgers. "You've seen it in Spain this weekend, Real Madrid, Atlético Madrid … it can happen. These last few hurdles, no matter how you clear the others, can unsettle you. The impossible can become the possible. We know that. But I see Man City now as the clear favourites."